ARCADIA NEW HOMES – 2017 SALES PACE STEADY –HIGH INVENTORY – STRONG PIPELINE BUT …..
The pace of Arcadia (detached) new home sales held steady in 2017.
In 2014, the MLS reported 61 new Arcadia homes sold, 5.0 sales per month. 2015 was the “peak” year for Arcadia new (detached) home sales. In 2015 the MLS reported 65 new Arcadia homes sold, 5.4 sales per month. In 2016 sales declined 14 percent. Sales totaled 56, 4.7 sales per month. New home 2017 sales totaled 53, 4.4 per month, slightly less than 2016’s.
New (detached) home inventory remains at a high level. Currently there are forty-three homes listed for sale on the MLS, five of which are in escrow. Those forty-three homes translate to a ten month inventory given recent new home sale velocity.
Even with the high inventory the pace of new construction should be steady (FOR AWHILE). The Arcadia Building Department reported 112 single family home (detached) building permits were issued in 2016. In 2017 seventy-three (73) SFR building permits were issued, a thirty-five percent decrease from 2016. THINGS ARE CHANGING. During the 4th quarter 2017, only fourteen (14) permits were issued. This is a significant decline. It is reported Arcadia demo and building permit applications/requests are “way down”. We should see less SFR construction and construction starts in coming months.
During the last four years, Arcadia new home prices on a per sq. ft. basis have very moderately declined. In 2014 the average new home price was $3,347625 ($604/sq.ft.); in 2015 the average was $3,919,351 ($587/sq.ft.); in 2016 $3,383,432 ($589/sq/ ft.) and in 2017, $3,361,422 ($574/sq. ft.)
Many factors may contribute to the very moderate decline in new and upper end Arcadia home sales. Chinese individuals have always faced Chinese government constraints to overseas investments. For years wealthy Chinese have figured out ways to get around these constraints – a kind of “cat and mouse’ game. The Chinese government has been tightening its monetary policy and further increasing restrictions to slow outbound capital flows. It has had an impact. Chinese home buyers have extended their reach/search beyond Arcadia/San Gabriel Valley to other Southern Cal locals and US cities in the last few years. Many of these cities are viewed as more affordable. Seattle, Portland, Bay Area, Dallas and Florida cities are generating more Chinese interest and investment.
Credit Suisse estimates there are 1.6 million U.S. dollar millionaires in China. These millionaires will continue to figure out how to invest in overseas markets in order to diversify assets and hedge against potential Chinese economic and political uncertainties. Arcadia/San Gabriel Valley with so many attributes will continue to be a primary destination for these millionaires’ capital.